Wednesday, November 28, 2007

I've always been a big fan of the Exceptional Parent magazine. Its got lots of good info on almost every aspect of daily living when you have a child with a disability. Medical research, products available, legal info ... only problem is, its all American. And as is often the case, there never seems to be a Canadian equivalent.

So I was very pleased and surprised to come across the Exceptional Family magazine recently. Yes, Virginia, it is Canadian.

Apparently its a quarterly publication (published four times per year) and has been around for a couple of years.

In her first editorial published in the inaugural issue in the fall of 2005, Aviva set out her mandate as Editor:

As a public resource, Exceptional Family was born to unify the special needs community that often feels isolated, misunderstood and marginalized. As such, it will serve as both a reference and support network for exceptional families in search of validation of their unique emotions, challenges and experiences. In addition to the publication’s parent audience, EF will also serve as a resource for medical and mental-health professionals who wish to be on top of the latest research and developments within the exceptional population.

For his part, Warren who accepted to act as Publisher of the new magazine, describes the venture as “an exciting opportunity to reach out and connect not only with our clients and their families, but to the broader population of exceptional people and service providers.”

He vows to “break the silence and stigma surrounding disabilities…to serve as the communal voice of strength and inspiration.”

I've only read halfway through the Fall 2007 issue but so far I'm pleased. No, its not Exceptional Parent but it is Canadian!

Saturday, November 24, 2007

Hi Michelle, Just thought that I would let you and your readers know that Bill C-28 was tabled in Ottawa on November 21st. Among other things, the Bill will create the RDSP. I've got a bit more information at my blog: http://rdsp.wordpress.com/Cheers, Jack

Wednesday, November 21, 2007

We've been discusssing the Henson Trust over the last couple. Today a look at another practical issue around the use of a Henson Trust.

Validity of the Henson Trust in Nova Scotia

Apparently the Department of Community Services (DCS) takes the view that Henson Trusts are not valid in Nova Scotia. In other words, go ahead and set one up if you want, but you are wasting your time and money. Because we will take the view that your child has access to assets and thus they will be ineligible for benefits.

Here is the 'scoop' on that, according to Mr. Pope. And remember this when you go to a lawyer to create a Henson Trust, either in the context of your Will or otherwise (which we will discuss later).

Discretionary trusts will not protect your child's access to government benefits.

A discretionary trust is a type of trust where the Trustee is given discretion as to what types of investments to invest in and as to whether and when to distribute money to the beneficiaries. This type of trust is fairly common in a Will where one of the beneficiaries is a minor. Even though with this type of trust, the Trustee has the discretion to decide whether or not to distribute money to the beneficiary, this won't be sufficient for our purposes. Because with a discretionary trust, the beneficiary (your child, in this case) would still have the legal right to go to court and have the Trustee's exercise of discretion analyzed to ensure that it has been exercised reasonably. And if the court find that the Trustee has acted unreasonably, it can compel him to pay benefits to the beneficiary.

You will recall , however, that the Henson Trust is an absolute discretionary trust, meaning that the Trustee cannot be compelled (forced) to disburse money for the support of the beneficiary. In other words, your child, as the beneficiary of such a trust, will have absolutely no legal right to go to court and force the Trustee to provide any money to her. Theoretically, the Trustee could decide to never disburse any money from the trust and there would be nothing that anyone could do about it. But that is the crux of the matter, the good and the bad. That lack of control by your child is what is required to protect their access to government benefits. And also, incidentally, why you will want to choose your Trustee with great care. You are giving them a lot of power over your child's life.

So why is the Department taking the view that Henson Trusts are not valid in Nova Scotia and we are telling you otherwise?

Monday, November 19, 2007

Last time we were discussing the Henson Trust, what it is and why it is so very important for our children. Now we will take a look at a couple of practical issues around the use of a Henson Trust.What if my child has assets now and I need to protect their government benefits now?

In addition to its use in a Will, a Henson Trust can be used as an inter vivos trust vehicle ... meaning a Henson Trust can be used while the settlor (that's you or whoever owns the assets) is still alive. A person can set up a trust for someone else outside of a Will, while they are still alive. And you can use a Henson Trust to do this.

There was one gentleman at the Disability and Estate Planning Seminar who had created a Henson Trust for his son a few years ago. He wanted to test the trust while he was still alive to fight it, just in case there was be any difficulty with the Department of Community Services (DCS). Despite having been told by the DCS that a Henson Trust would not allow his son to keep receiving government benefits, there has been no problem. This supposed issue with the DCS will be discussed in a later post.

If you want to set up a Henson Trust for your child while you are still alive, into which you would presumably transfer assets now as well as anything your child will become entitled to under your Will after your death, make sure that you consult a lawyer. One who is familiar with Henson Trusts and what is required.

As always, and as stated in the side bar, nothing written here is meant to be taken as legal advice or opinion. Its general information. Always consult with a lawyer as to th specifics of your indvidual family situation.

Sunday, November 18, 2007

Monday, November 12, 2007

The Henson Trust was named after an Ontario man who wanted to pass his entire estate onto his disabled daughter. But if she became the sole beneficiary of the estate and therefore "owned" significant assets and/or property, the government would consider her ineligible for any social assisatance payments. Meaning, for example, that if she lived in Nova Scotia, she would be ineligible for any of those programs we discussed under the Province's Services for Persons with Disabilities Program.

However, the releveant regulations did allow a person in her position to have some money in hand and didn't hold it against a disabled person when a third party provided a discretionary benefit.

For this reason, Mr. Henson drafted his will so that his entire estate was transferred to three trustees to be held on his daughter's behalf. The trustees (and this is the oh so very important part) had the discretion to withhold or spend the income and capital to best serve the daughter's interests. For example, money from the estate could be used to buy her a TV or new clothes or pay for a chaperoned trip. And because these payments were considered discretionary benefits, she still qualified for government support.

What the will didn't do was give the daughter a legal claim to demand money. Unlike the traditional trust that parents often set up in their wills for their minor children, Henson's daughter would never be in a position to go to court and claim that the trustees were wrongfully withholding trust monies from her. It was precisely because she had no legal claim to the monies that the government could not treat the money as hers after she inherited it.

Despite this, the government still saw fit to withhold the daugher's social assistance after Henson died. Which meant that she that she (or more accurately her guardian) was forced to take the matter to court. The Ontario Court of Appeal ruled that the daughter was eligible for continued government benefits and ordered the payments to be reinstated. Unfortunately, it was a hollow victory for Henson's daughter as she died before the Court of Appeal could rule in her favour.

The same advice might well apply here. I'm just going to pass on what we were told at the Seminar. Which went something like this:

If your adult child with a disability lives at home with you, he or she will be eligible for a certain amount of "provincial benefits". However, if that same adult child were living in some other environment, such as a supported living environment like a group home, they would be eligible to receive a much higher amount.

[Ed. note: We know that under the SPD policy, the child who lives at home would receive benefits pursuant the Direct Family Support policy and the child living in a different situation would receive benefits under the policy appropriate to that situation.]

You can increase the amount you receive for your adult child who lives at home by having that child enter into a written lease with you. Make the lease payment slightly higher than the provincial shelter amount and the child will become eligible for the increased benefit. Although the Department of Community Services may tell you that in order for your child to be eligible for the "shelter amount", they must live in a self-contained unit, you can point out that many individuals who live in rooming houses receive the shelter amount. And although the Department may not be too happy with situation, it is said that you should have a pretty good chance of success if the child can help with shopping and cooking. And even if it doesn't work, its still worth a try as you've lost nothing.

If you're interested in knowing what the provincial shelter rate is at the moment, go here. Scroll down to the bottom of the page. The "shelter allowance" is the very fist item under Appendix A. But remember, I am just passing on information on this one. As I said in the title, your mileage may vary ... which may be why God invented lawyers in the first place.

Update: I neglected to mention that, both as I understand it and as set out by Mr. Pope, you will not be required to report the monies paid to you by your adult child on your Income Tax Return as you are providing support to a dependant. But its always good to double check with your accountant and lawyer.

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